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QUEST MEANS BUSINESS
Can QE2 Benefit You?; Rolls Royce Investigates Its Engine Fault
Aired November 8, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: The question: Can QE2 benefit you? President Obama argues U.S. stimulus is in everyone's interest.
It is a record for gold prices and a call to debate a return to the gold standard.
And progress, but no answers. Rolls-Royce investigates its engine fault.
I'm Richard Quest. We may start the week, because I mean business.
There are three days until the G20 summit takes place and world leaders seem to be bitterly divided over economic issues, especially currency and trade. The challenge is to come up with some kind of working compromise. Or they will risk endangering the fragile recovery.
President Obama, who is in India, has defied those who criticized the Fed's decision to raise quantitative easing by $600 billion, B. Saying that what is good for America is good for world, he spoke of the need to rebalance the global economy.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States has been an engine for growth, for trade, for opportunity, for decades now. And we have just gone through an extraordinary economic trauma, which has resulted in some extraordinary measures. And the worst thing that could happen, to the world economy, not ours-not just ours, but the entire world's economy, is if we end up being stuck with no growth or very limited growth.
(END VIDEO CLIP)
QUEST: So it is basically a squabble about growth and fair trade. If you look at the G20 and the countries involved, it is a huge expanse of the world. Most of the world-of the economic world is represented. Brazil's finance minister is calling it a currency war, and the weapon is to deliberately devalue your currency to get one up.
The United States, of course, has come under fire for its fresh round of quantitative easing, which some are seeing doing precisely, creating, a devalued situation for the U.S. economy. There have been complaints from Russia, from Brazil, even China, the emerging markets which are the magnets for the wall of newly minted cash.
Now, Germany, for example, has called the policy clueless. And the head of Brazil's central bank has compared it to throwing money out of a helicopter. Perhaps only China has struck the more conciliatory note, when it said-when the deputy finance minister said the move would contribute tremendously to global growth.
But it doesn't really matter whether we are in the Western side, down in Europe, down in Africa, or over to the East, there is disagreement over what should be done. It look, though, as if the U.S. is willing to drop a key idea to bring things back into balance, like cap and trade on surpluses and deficits.
Joe Cusick is the senior markets analyst at the OptionsXpress trading floor in Chicago.
Joe, you have just heard me. The G20-I mean, one might as well ask why they don't just all stay at home. There is no real agreement there, yet, is there?
JOE CUSICK, SENIOR MARKETS ANALYST, OPTIONSEXPRESS: No, not at all. I mean, I would love to be a fly on that wall, in Seoul, because it is going to be a very cantankerous discussion. As you mentioned, the U.S., they are going to be chided for our policies right now with the dollar, and the stimulus that we are trying to just fight this deflation here and de- lever. I think as you duly noted the Brazilians, they are fanning the fires right now. And the Chinese continually stay stubborn with how they are dealing with their currency. So, it is going to be a very heated, closed door meeting, that I think are going to be happening in Seoul.
QUEST: Do you think in that environment there is any potential for a real agreement, to rebalance trade and global balance between, say, the surplus and the deficit countries?
CUSICK: Yes, there is definitely going to be a severe call to action. I think they are going to come up with some policies that will continue to help with the austerity that the EU is trying to get under control and get pushed out there. Do I think they are going to come up solutions? Well, we saw the pre-emptive meeting a couple of weeks ago. Not a lot came out except for the fact that Geithner threw the first-the-uh, the first shots out there about what we were proposing to do, with you know, the policies of the Fed.
The bottom line is that we all know that if, you know, because the pundits have been out talking emerging markets, I know inflation is something they are trying to control. And there is a lot of money going into China, they have got to come up with something that the markets are just not going to say-yeah?
QUEST: Joe, I want to just put-stay with me, I want to remind or tell our viewers today, or overnight, in an article in the "Financial Times", the president of the World Bank said it is not just a matter of tweaking the valves, he says, there needs to be a complete overhaul of the system. Robert Zoellick says, we should return to a form of gold standard. The system should consider employing gold as an international point of market expectations. As a result we have seen gold go to $1,400, it is at a record high. And we are also seeing other currency-we are also seeing other commodities.
Now, where does the markets in Chicago stand on this idea of gold, and a return to the gold standard?
CUSICK: It is very mixed, at best. I think one of the biggest things is that we're-obviously, with the deleveraging that we doing here, and the inflation that we are looking at down the road, you are talking about putting together something that right now would add an enormous amount of volatility into these markets, going back to that standard. And I don't even know if we could, you know, right now at this stage quantify what the impacts could be in the commodity markets alone, if we do move to that standard. So right now, that would be-there would definitely be some volatility revolved around that, a lot of trade.
QUEST: Joe, commodities are very much in the news. We'll talk to you again. Many thanks for joining us.
QUEST: You joining us there from Chicago.
The markets in New York, just looking at your screen at the moment, down about 40, 50 points. Alison Kosik is at the New York Stock Exchange.
Not entirely clear why the markets got a bit of indigestion today?
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Kind of like a hangover from the big rally that we had last week, Richard. You know, about hangovers, right?
QUEST: Absolutely. And it is pleasing to see that I'm not alone. You are obviously with me on this one, too.
KOSIK: Well, you know, investors are at least, you know.
Go ahead, Richard.
QUEST: So what has actually happened that has causing this disagreement, if you like, within the market? Because we had very good numbers; we had the employment number, but still there is unease?
KOSIK: There is unease, but we are definitely more bullish here on Wall Street at this point. I mean, let's look at how far we've come. I mean, we began today at two-year highs. We have come really far from the very bottom of the recession. And what we are seeing now isn't such a huge surprise to see the market taking a breather. It is really not much of a breather. The Dow only down 33, the Nasdaq is in positive territory. S&P only down a little bit.
I think the pause that you are seeing is investors really waiting to see what is going to come out of the G20 meeting, later this week. And people really just taking some profits off the table. Overall though, Richard, investors were very pleased with what happened last week. Between the midterm elections and Republicans taking that victory in the House, with the Fed saying that it is basically rev up the printing press and throw $600 billion into the economy. And of course, we had that really good jobs report. It shows that we are on a pretty good track at this point, with the goals here saying that they see a pretty good rally continuing through the end of the year, Richard.
QUEST: Alison Kosik, who is that the New York Stock Exchange, at the start of what is going to be an interesting and busy week.
Qantas, and the A380, the Qantas fleet is still on the ground. The only thing that might be shifting for the time being is the blame. Roll Royce says that it is, that it is making progress on the investigation into the incident last week. What does that mean?
(DESK BELL CHIMES)
QUEST: Welcome back.
Rolls-Royce says it is making progress towards understanding what caused one of its engines to fail, on a Qantas A380. The company insists the issue is not related to problems with other models, such as the RB21 or the Trent 1000. Part of a Trent 900 engine tore off-well, you know, just minutes after the plane had left Shangear (ph) Airport in Singapore.
Now as we look at the A380, Rolls says, "It is now clear this incident is specific to the Trent 900 engine." So it is specifically saying it is it is the 900, not related to another Rolls-Royce engine that blew up in testing in August; that is the 1000.
Meanwhile, the Qantas fleet of A380s is still on the ground. There have been oil found, oil puddling, as it is known, have been found in Rolls-Royce engines, the Trent 900s. And the fleet will stay grounded for at least another 72 hours. The Qantas Chief Exec Alan Joyce says the investigation will continue.
(BEGIN VIDEO CLIP)
ALAN JOYCE, CEO, QANTAS, The focus of our investigation has narrowed to the possibility of an oil leakage in the relevant turbine area.
(END VIDEO CLIP)
QUEST: Now, in the meantime, hundreds of passengers have been left stranded. So, who is to blame? Well, as you are about to see, there is plenty of blame to go around. There are three main players in this. Qantas, of course, with its just about-well, 100 percent safety record, in terms of fatal accidents.
Alan Joyce, in saying what he did, is specifically saying that maintenance was not an issue. He, of course, is also alluding to the fact that the decision to outsource offshore maintenance is not a contributing factor either. Airline Pilots Association and maintenance staff in Australia have claimed that to be part of the situation. Joyce is saying a material failure or a design issue may be to blame.
Airbus, for its part, is a little bit caught in the middle. Airbus, the 380, is its most expensive launch and its biggest, of course, aircraft. With 100 percent safety record doesn't mean much, there are only 36, 37 of them in service at the moment. Airbus will have to sell about 500 or 600 hundred 380s before it will make profit on the program. So far, they have only sold just over 230. At the moment, it is only the planes of Rolls- Royce, of Qantas, not Singapore, or Lufthansa or any of the other ones that is off.
And so, we end up at the desk of Rolls-Royce. Alan Joyce has pointed the finger firmly at the British aero engine manufacturer. We had one very short statement from Rolls-Royce the other day. Another one today saying it is not related to other engines. So far, though, Rolls has not done any interviews. It has only put out a couple of statements and it just says that progress is being made.
Not surprisingly, Rolls-Qantas share price is down 2.1. Interestingly, Rolls-Royce is up 2.7 percent, and EADS, is also just up a fraction. But at the moment it is Qantas that is bearing the brunt of that, on its shares in Australia. So, where does the buck stop?
Joseph Lampel is professor of strategy at Cass Business School in London. Professor Lampel joins us now via broadband.
What have I have not been able to understand, looking at the Rolls- Royce statement, Professor, is they say this incident was the Trent 900. Do you understand this, that Rolls is now saying their engine is to blame?
JOSEPH LAMPEL, PROF. OF STRATEGY, CASS BUSINESS SCHOOL: No, I don't quite see it that way. I think they are basically delaying. They are trying to say that it is only confined to the 900. They are worried that people may draw patterns, or see design or safety problems in other engines. And therefore, the perception of safety, should the engine would split beyond the 900. By confining it to the 900, at least they are reducing damage to that particular engine-potential damage.
LAMPEL: They are not admitting (AUDIO GAP) the problem.
QUEST: No, but for Rolls-Royce, their share price is up 2 percent today, 2.7 percent, or so. It was heavily down, of course, last week. So that is just a little bit of a bounce back. For Rolls-Royce, this could create a crisis of confidence for them, then?
LAMPEL: It could create a crisis of confidence given the fact that they are very stretched in terms of their orders. And the fact remains that the 900 and the 1000, which was supposed to come out today, would present a massive investment for them. So clearly there is tremendous downside if this problem is not contained very quickly.
QUEST: What about Qantas? You know, it is the old argument, isn't it? No smoke without fire. You can write off each incident as being unique, whether it is the hole in the 747, whether it is the poor (UNINTELLIGIBLE), whatever it is. But is there a feeling that something needs-that Qantas has lost the plot?
LAMPEL: Yes, I think there is that feeling. Simply because no other engine manufacturer has reported, or no other airline, has reported a similar problem, or anything approaching that. So, the fact that the incidents have happened in Qantas, makes people suspicious. They are beginning to wonder whether something is going on here. So, naturally, Qantas is rushing forward to insist that it is not really their fault. It has something to do with the design of the engine themselves. We'll have to see how the thing plays out. There is still a few more days for the interaction, for the two sides to come together. Hopefully they'll come together and try to sort it out privately, rather than do it through the media.
QUEST: The 380, we are looking at a picture now, of the 380, and these very phenomenally complicated schematics and engines. When we talk about Rolls-Royce and the way they have handled this crisis. Two statements, no interviews, it is as if the shutters have gone up. Are they doing themselves any favors? Alan Joyce has been out and about speaking on more than one occasion. Rolls-Royce hasn't said a word publicly.
LAMPEL: I have to say that they are doing a very poor job managing the situation. What they are doing is exactly what you are not supposed to do. You are not supposed to keep quiet instead. You are not supposed to put up kind of very neutral statements about looking for causes. You are supposed to move forward and try to get on top of things.
It is definitely understandable. Being an engineering company they believe in facts. They believe in being very specific and concrete, when they do communicate to the press. But having said that it is still important that they come forward and try to engage the people, who are asking questions; I mean, from their point of view, if you are an engine manufacturer, one question you would never want to have to have answer is, are your engines safe? But having said that, they still have to confront those issues and not try to hide behind those kind of stark (ph) statements to the press.
QUEST: Professor, many thanks indeed.
LAMPEL: Thank you.
QUEST: Professor Lampel joining from the Cass Business School.
On this question of who has got what to answer, Qantas chief has some tough decisions to make. I read this morning, a fascinating article, which I have posted incidentally, on Facebook. It suggests that even for Qantas its parts are worth more than the whole. And it goes into detail about issues facing the Australian carrier. It is at Facebook.com/CNNQuest. Become our friend, follow the program, and read that interesting article. Which, incidentally comes from the SMH, the "Sydney Morning Herald" blogs, but you can see it on our site.
OK, we are all going to take a look at lower altitude problems next, we are in Curitiba, in Brazil, with the city expanding fast we will tell you what is being done to protect its public transport system from the booming car ownership, in a moment.
QUEST: Brazil's booming economy will make it a key player at this week's G20 summit in Seoul. GDP expected to rise by 7.6 percent this year. That high-speed growth is creating real challenges back in Brazil. Now, this month's, of course, we are looking at Curitiba, the city in the south of Brazil. And Curitiba's public transport system, this is a map of the bus system. And Curitiba has a fascinating bus system that, frankly, is out of this world. For this week's "Future Cities" I found out what is being done to keep this city using this map, up to speed.
QUEST (voice over): The unmistakable colors of the bus system in Curitiba, Brazil. Moving more than 2 million passengers around each work day, it is a network that has been admired worldwide, as a triumph of urban planning. The system was built in the 1970s. It has become a dominant feature of the city's design.
The main arteries are lanes, dedicated only to buses. No cars allowed. The buses move quickly without worrying about traffic. In other words, the bus is behaving like a subway.
JAIME LERNER, ARCHITECT: We knew that we didn't have the money for metro, or for a tube. And we realized why not on surface?
QUEST: The architect Jaime Lerner helped develop Curitiba's rapid bus transit system.
LERNER: It has to be fast, it has to have comfort, or-and most of all, reliability.
QUEST: High rises can only be built along the exclusive bus lanes. So the city is spread out, away from the center. It results in less concentrated areas, and less traffic.
MARCOS ISFER, DIRECTOR, CURITIBA TRANSPORTATION (through translator): This (UNINTELLIGIBLE) was created to help the urban growth, and allow it to be done proper planning. Allowing more people to live in a smaller area, living, studying and working, around this transportation system.
QUEST (on camera): Just one, please.
(Voice over): Hearing so much about this bus system, I needed to try it myself. Passengers pay at these tube stations to speed up the process of boarding the bus.
(On camera): Here comes the bus.
It is certainly popular.
(Voice over): Easy to use, it gets pretty crowded with Curitiba's growing population, the buses are starting to reach capacity. The city's growth has brought wealth. In 2009, Curitiba had a per capita income of $12,000. More money, more people; so now, more cars.
LUCIANO DUCCI, MAYOR OF CURITIBA: Curitiba has the biggest number of cars per capita in Brazil, therefore we have these challenges. Challenges that all big cities of the modern world have to face. It is difficult today, because the use of individual transportation is very personal.
QUEST: To address this growing car problem Curitiba is sticking with what it knows best.
ISFER (through translator): We average over 2 million passengers in our system daily. This forces us to work hard to make sure our transportation system works well, with quality and affordable prices, as well as being efficient, moving people fast from one point to another.
QUEST: One of the first steps is to expand the system, adding the Green Line. It started in 2008. It will add nine kilometers to the existing 72 kilometers of exclusive bus lanes. It will transport 32,000 people a day.
ISFER: The Green Line used to be just a highway that connected the south of the country to the north of the country. A link to important cities like Sao Paolo and Porta Legra (ph). We used to have a very heavy flow of cars, trucks, buses.
QUEST: Now, this former federal highway has Curitiba's sixth exclusive bus lane. And it is testing out the new bio-diesel buses, that one day could be used for the whole city.
ELICIO LUIZ KARAS, GREEN LINE PROJECT (through translator): We have committed to operating 10 percent of buses in bio-fuels, using either ethanol, or vegetable oils. We are looking at adding about another 150 buses using bio-fuels to the fleet.
QUEST: The city knows expanding the buses isn't the only answer. It must also improve existing infrastructure.
ISFER (through translator): We are working on a new passing system now, to allow passing on the regular lanes so we can have everything flowing faster. More buses in use in the lane, and subsequently (ph) more people moved.
QUEST: The number of cars may be growing, but Curitiba has no plans to adapt the system to accommodate this growth. For this city the key is sustainability.
ISFER (through translator): If you always choose (ph) the foolish (ph) transportation of driving, you will be automatically making people see that car with only one person on it makes no sense. This isn't sustainable. This isn't viable for the future.
QUEST: The buses have worked well, and yet, the future of Curitiba's transportation could ultimately lead back to a plan that was once thought was too expensive.
UNIDENTIFIED MALE (through translator): We can't leave aside the idea of a metro in the future. We are already discussing the financing with the federal government, since it is a very expensive investment.
ISFER (through translator): We are complementing the bus system with a subway system, ultimately all the public transportation systems that will be used by most people, moving people within the city on a sustainable manner.
QUEST (On camera): With its tubes, its platforms, and its buses, Curitiba has been a dissenter of mass transit thing for a quarter of a century. Now with the refinements being planned, and the intention to build underground, Curitiba is determined to remain a future city.
QUEST: More from Curitiba as we continue our look at the Southern Brazilian city, that has won awards for sustainability, in next week's QUEST MEANS BUSINESS. Of course, always, on a Monday.
In a moment, after a very short break, an expected election victory for Greece's ruling party. The country's PM says it is a vote of confidence in austerity. The finance minister will discuss what the bond market makes of Greece's plans at the moment. QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
With the eyes of the world focused on Myanmar, thousands of them are trying to escape post-election violence. At least 10,000 refugees are now pouring over the border into Thailand following clashes between rebel groups and government soldiers. The violence comes one day after widely criticized elections that all but served to keep the military junta in power.
Winding down after a three day visit to India and President Obama spoke in the country's parliament. He said and backed the idea of giving India a permanent seat on the U.N. Security Council and says the U.S. and India must stand shoulder to shoulder, cooperating on the economy, the fight against terrorism and other global issues.
Palestinian officials are accusing the Israeli prime minister of sabotaging the Middle East peace talks after Israel announced plans to build some 1,300 new homes in East Jerusalem. The news is casting a pall over Benjamin Netanyahu's visit to the U.S. to discuss efforts to resume the talks. Direct negotiations began in early September, but have stalled over the settlement issue.
In Haiti, health officials now are worried flooding from Hurricane Tomas and mounting garbage could make a spreading cholera outbreak even worse. The health minister says cholera has killed at least 540 people in remote areas. It's infected more than 8,000 others. So far, the outbreak hasn't spread to the capital. Doctors say they're testing 91 residents for a positive -- possible cholera in a Port-au-Prince slum.
Against all the odds, Greece's ruling party has won a victory in the first round of local elections. The prime minister, George Papandreou, says the results are a vote of confidence for his party's deep spending cuts. With more than 95 percent of votes counted, the socialist PASOK Party has taken the lead in seven of 13 regions and the prime minister had threatened a snap election if voters didn't support him. He now says there will be no snap elections.
Investors are relieved that wasn't the case. The political uncertainty has eased and the Athens Index gained around 1.25 percent on Monday. Athens -- yields on 10-year Greek bonds also fell, but they are still above 11 percent.
Greece is committed to con -- to reducing its budget deficit by a whopping 5.5 percent this year. The finance minister, George Papaconstantinou told me earlier they'd probably beat that target and that next year's budget won't include new tax hikes or further cuts in pensions and wages.
GEORGE PAPACONSTANTINOU, GREEK FINANCE MINISTER: We think that you cannot continue cutting wages and pensions. You cannot continue increasing taxes, because the economy is at the stage where more taxes would actually backfire on us. There is a scope for additional cuts in -- in -- in spending, government spending. And we have been discussing some of these. We'll see how we come up at the end of the negotiation with the Froga (ph).
QUEST: So it will be a budget that won't raise more taxes and it won't impose further welfare cuts?
PAPACONSTANTINOU: It's going to be a budget that would not raise more taxes than those that we have already committed to doing, because there will be a small increase in VAT, as we have already committed to the IMF program -- the UMIF (ph) program -- and there is going to be no cuts in wages or pensions.
QUEST: The market, having shown -- the bond market, having shown such enthusiasm and actually the debt -- 10-year debt, at least came on, you know, 9 percent. Now it's back over 11 percent.
What happened to cause the lack of confidence and push bonds back up again -- yields?
PAPACONSTANTINOU: Well, two things. One there was a -- a -- a widening of operationals. I think there's a -- there was a broader context within which we're set. But the second thing is that the market got worried that an election may -- could have resulted in the government losing power and therefore the market sees very mu -- very well that we are committed to doing what it -- what it takes. And that was the fear that was there.
But if you look at this morning, it's interesting that while other peripherals have widened as a result of the elections and the -- the very clear signal that we're continuing, our spreads have narrowed.
QUEST: But then the market is telling you that it's still not happy with the underlying integrity of the Greek economy.
PAPACONSTANTINOU: No. I think what the market is telling us is it's interested not just in the short-term, but also in the mid-term. The market looks beyond the -- the -- the next few months, even the next year or two. And it looks at the dynamics of the Greek debt. And those dynamics are sustainable once we move into primary services and once growth gets back going again. And that's going to be from 2012 onwards.
QUEST: Fortuitously, last night, I received an e-mail just from a viewer who says: "The crisis is -- is much worse than it appears in the news. The worst sectors are small -- poor people and SMEs and the employment figures are much worse than they appear. The banks have turned off the ducts completely. Productivity is an -- is an unknown. I wonder what is my future in this gloomy economy when all we hear in the news is the same thing -- we're on the verge of bankruptcy."
PAPACONSTANTINOU: I would respond to -- to your viewer by saying that, for example, the situation is difficult. There's no question about it. There are -- we are in a recession, a recession where the GDP is falling 4 percent. That means closures. That means unemployment growing up.
However, for example, banks are continuing to lend. You have a -- a net increase in bank lending, which is positive. We've had some of the big Greek banks having a capital increase in their -- in their capital adequacy ratios, capital share increases, importantly. They're open -- their lines, their interbank lines are opening. That there's going to be more liquidity into the system, more funding. And, therefore, we hope that -- we're sure, actually, that next year's GDP growth is going to be better than this year. The -- the four (INAUDIBLE)...
QUEST: So you -- there will be growth in...
QUEST: -- next...
PAPACONSTANTINOU: We're -- we're hoping that we will have at least one quarter of positive growth next year. But it's clear that the recession is continuing until next year. The -- the program predicts a GDP-4 of -2.6 percent.
QUEST: Just one other area. We -- we -- we must return to the perennial question of the overall debt level. There are people who tell me that even if everything goes according to plan, that the level of debt, taking into account what was on the books previously and the amount that's coming from the E.U. fund is still unsustainable, even once Greece is -- returns to growth.
PAPACONSTANTINOU: That's not -- that's not correct. I know there's a lot of people saying that, but actually, the sustainability of the debt level depends on whether you have significant primary services. And we're going to be having those from 2012 onwards. And if growth resumes, and at the end of all these structural reforms, it can have a positive shock to the they and, therefore, higher growth rates.
And don't forget one thing, private level of G -- private debt as a percentage of the GDP in Greece is very low. And that's an important thing to keep in mind, compared with other countries -- the U.K. is a very good example, but there's others -- our total debt, private plus public, is actually quite sustainable compared with the rest of Europe.
(END VIDEO TAPE)
QUEST: The Greek finance minister talking to me earlier.
He may think Greece is the place to be.
What about tourists?
We're swapping yields and bonds for the beach, as we turn and ask the Greek tourism minister how to get the sun beds filled and whether or not the Greek prices are still too high.
QUEST: In Greece, widespread protests over public spending cuts have been something of a turnoff for tourists over the summer season. In a country where tourism accounts for more than 15 percent of GDP, it's a major problem.
At the annual World Travel Market in London, the Greek deputy minister of culture and tourism told Ayesha Durgahee about the challenges of attracting visitors in these times.
GEORGE NIKITIADIS, GREEK DEPUTY MINISTER OF CULTURE & TOURISM: It is not an easy thing to promote your product, having no money. We're facing the economic crisis. There is -- we've found the debt in the Greek tourist organization over 120 million euros. We have to repay back and we are repaying back everybody. And we are trying very hard and I think we have putting everything under control at the moment.
AYESHA DURGAHEE, CNN CORRESPONDENT: Are you here to reinforce the -- the good things about Greece or change the perception that...
DURGAHEE: -- people have of the country.
NIKITIADIS: Exactly. And to add something into that, we lost the British market. And we know that the British people love the islands. So probably it is the prices, probably it is the role promotion that we did the last five years. We are fixing the prices. We're doing the right promotion.
DURGAHEE: How hard have the hotels been hit, then, in terms of occupancy rates in this recession?
NIKITIADIS: We have an increase of 1.5. But we will -- we should have an increase of 10 percent. Next year, I am sure we will have an increase of 10 and more. I believe that no bad thing will happen so decisive that it will not permit the people to come.
DURGAHEE: Is the mood in the country optimistic?
NIKITIADIS: It is. After the elections, we have a strong mandate that we know we are taking hard measures. We've filled them. We don't like them. But it's the only way to save the country. Go ahead, and that's what we're doing.
DURGAHEE: So you've only been in this position for seven months?
DURGAHEE: When you started, did you think, we've got a lot of work to do?
NIKITIADIS: A lot of work, really. It is a lot of work, especially because now we're changing everything. Actually, it is the first time I feel that we are planning a serious strategy, a serious business plan, that we want to follow. And this is the most important. Greece is changing. Its tourism is changing. And I think we are in the right track to succeed.
(END VIDEO TAPE)
QUEST: The Greek tourism minister, deputy minister, talking to Ayesha Durgahee at the World Travel Market.
The weather forecast now. Guillermo Adruino is at the CNN World Weather Center and...
GUILLERMO ARDUINO, CNN METEOROLOGIST: Nasty, nasty, nasty.
QUEST: Yes, you bet. You said it. You said it three times.
ARDUINO: Nasty weather.
QUEST: I'll tell you, I don't know where that one is coming from, but I know where it's going to.
ARDUINO: Yes. And, also, it's cooling down.
But you know what?
There -- there are some spots that are not that bad. And also, the cold weather is arriving in the States, as well. If you were in New York, it would be terribly cold. So stay in London for a little bit. And also, the cold air is descending all the way here, to Spain, to Northern Spain. It's going to be very breezy in Galicia. Let me see if I remember the name of this place -- Finistere (ph) the end of the world. I think that every country ahs a Finistere. Every country has, that ends in the water. Finistere, the end of the world, here it's very breezy, and, also wavy on the coast.
We'll see it to the east of, Richard, all the way down up north, west, east, south, except for some parts of Spain.
But let's see the British Isles. The next four days, we're going to be sandwiched in between two fronts, one that will be coming here very soon. Everything is spinning around. Now it's getting better in London for a little bit. And then the rain will come back. So this is the official forecast if you're going to London, Paris, even Amsterdam tomorrow, you may see some problems at airports. It's not going to be terrible, but it's going to be uncomfortable. Also, Copenhagen with windy conditions and then some rain.
Barcelona, in Northern Spain; Madrid also with some windy conditions. Rome, windy all over.
Now, let's see the spots that are going to be really bad. As I said, with the system descending here into the Bay of Biscay, strong winds. Windy here, Finistere, in Galicia. Also here in Italy and the Adriatic Sea, it's going to be very choppy. You know, if there are any ships going across the Adriatic Sea, very, very choppy, indeed. Single numbers -- Stockholm 3; 9 the high in London; 21 in Athens.
Let's see in the States. Here, the New England states, it's not snowing. In Boston, I was checking, also, Buffalo. I was checking what was going on in Buffalo. It's fine for the time being. Buffalo, it's a very cold city. If you are from there, you know what I'm talking about.
Some parts of New York are getting snow, but it's going to change. You see, the cold air, it's coming to an end. The warm returns. So probably, Richard, I would say, if you come to Chicago, you're going to find temps above average. It's going to be pretty nice -- one of the most elegant cities in the United States. I'm sure that Richard agrees with me. Chicago is a gorgeous, magnificent place to visit. Eighteen in Chicago the high for right now, 17 in Washington, 21 in Charlotte. And this is the forecast. Let's see, 19 in Chicago. That sounds like a great temperature for that wonderful city.
QUEST: I -- I -- before you go...
QUEST: One more pronunciation of that place in Spain, Fini -- Fini -- whatever -- whatever you said.
QUEST: We want to...
ARDUINO: That's it.
QUEST: I'll tell you...
ARDUINO: Finis is the end.
ARDUINO: -- steri, (INAUDIBLE).
QUEST: Thank you.
ARDUINO: You've got it.
QUEST: But you launch yourself at it rather -- well, I -- I feel -- I feel invigorated just hearing it.
All right, Finistere.
Guillermo, many thanks, indeed.
ARDUINO: Thank you.
QUEST: We'll move on.
And not in Finistere, but President Obama is in India tonight. And amidst the feasting and the fireworks, there is business support is very high on the agenda in just a moment.
QUEST: Western leaders are looking East for inspiration ahead of the G20, as they all head toward there. The leaders of the U.K. and the U.S. are both on the move. In Britain's case, the prime minister, David Cameron, is on his way to China. And Barack Obama, of course, is in India.
Both leaders have taken with them a large contingent of top industry leaders aiming to drum up some business.
Let's look at Obama's trip.
Sara Sidner is in New Delhi.
And I asked her about the business aspects of this trip.
SARA SIDNER, CNN CORRESPONDENT: Yes, I don't think this was a just for show situation. This was really a big deal. And when I mean big deal, I mean big business deal for the United States and its relationship with India. The very first thing the president sort of talking about he had made his initial speech outside of the Taj Hotel and talked about the Mumbai attacks, he talked about business, he talked about bringing jobs back to America. He said that the deals that are being made in India were $10 billion worth of deals and that would create 50,000 jobs back in America.
So that being a very -- excuse the pun -- big deal -- because, you know, in America, the -- the unemployment rate very high. The president trying to show his citizens that he is doing the right thing by bringing this large contingent of businessmen from America.
QUEST: Is there a contradiction, though, between the demand of a country like India and the economic demands of such a fast growing emerging nation and, clearly, the current policies of the United States?
The two seem to be on opposite sides.
SIDNER: You know, you think that. But I think there are a few things that were -- the president and Prime Minister Manmohan Singh tried to lay to rest, this whole argument, for example, over outsourcing and, you know, whether Indians were, quote, unquote, stealing American jobs. The president said, look, you know, I haven't made outsourcing the bogeyman here. There certainly needs to be more trade and more sharing between the two countries.
And, you know, India's economy is a real juggernaut. It's -- it's going up 9 percent per year and expected to go maybe even higher. And so, Richard, of course, you're going to get countries that are having difficulties economically looking at emerging markets like India, like China, like Brazil, trying to figure out where they can get a foothold.
Is it easy?
No. There's lots of red tape. There are lots of import taxes that the president is also trying to kind of get lowered a bit. But if you can get a foothold in this country, we're talking about the potential, you know, of a billion customers.
So who's going to say no to that?
QUEST: Finally, has he put to rest the $200 million rumored price tag on this particular trip, because I -- I know the argument that, of course, it's nothing like that?
But that number is out there and it's going to stick.
SIDNER: I think you said it yourself, you know, it's hard once these rumors hit the Web and once they go viral, hard to bring them and reign them back in. They have tried to say that it's absolutely outrageous, that number is not true. But then again, we're not able to get an exact number, saying that for security reasons, they can't explain how much the trip is actually costing per day.
So some people are going to believe it, some people won't. And it's just going to have to leave it like that -- Richard.
QUEST: And in case you're wondering how someone came up with that number, apparently, it's 2,000 people on the trip, 870 rooms in India and so on and so forth and so on. But, of course, the $200 million number is nothing like it.
The chief executives traveling with Mr. Obama are hoping to tap into the enormous market.
As Mallika Kapur found out, not everyone there will be pleased to have these people set up shop.
MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT: (voice-over): Chetan Patel owns a convenience store in the heart of Mumbai. It stocks food, toiletries, cleaning supplies -- the kind of good you'd find at Walmart. Business is pretty good, he says. No surprise, then, that the world's largest retailer wants to open stores in India, the world's second most populous nation.
Walmart's CEO is not the only one looking for new consumers. Still reeling from the effects of a recession back home, many top American executives traveling with President Obama on his India tour say they want to increase trade with India.
INDRA NOOYI, CHAIRMAN AND CEO, PEPSICO: It's critical that U.S. based multinationals like PepsiCo fully participate in growth markets like India, because driving growth in markets like India is what keeps us, as a company, competitive.
KAPUR: Even before the presidential visit, Walmart's president went to New Delhi to make his plea -- give overseas companies greater access to the Indian market.
Currently, India does not allow foreign multi-brand retailers to set up shop independently or to sell directly to consumers. So Walmart partnered with Indian Party Enterprises (ph) to set up wholesale centers, selling to restaurants and other businesses. Now, Walmart wants India to lift restrictions and allow access to everyday consumers.
MIKE DUKE, PRESIDENT & CEO, WALMART: We think it, of course, would be good for our business. We see the opportunity because of the -- the Indian population, the rising aspiration of millions of -- of Indian consumers that want to live a better life. And we believe we could contribute to that.
KAPUR: Analysts say opening up retail would ease massive supply bottlenecks and control food inflation. It's estimated that around 30 percent of India's farm produce spoils before it reaches consumers.
SALONI NANGIA, SENIOR VICE PRESIDENT, TECHNOPAK: When you look at food retail, there can be a number of benefits that can come in by the investment back in infrastructure, strengthening that, helping farmers with better prices, with better yield products, as well as controlling prices at the consumer end.
KAPUR: But not everyone is convinced of the benefits.
(on camera): India's retail sector is made up of millions of tiny but really well stocked local neighborhood stores like this one, who feel they will be wiped out if big retailers come in. "We want be able to compete with large chains," says Patel. "We'll all be jobless. I hope the big retailers don't come to India."
But the Indian government may think differently. It could press ahead with these market reforms as early as next year.
Mallika Kapur, CNN, Mumbai.
QUEST: We turn to the G20 for a Profitable Moment in just a moment.
QUEST: Tonight's Profitable Moment.
It won't be easy getting that agreement at this week's G20 in South Korea. Everyone has the same long-term wish for growth, but the immediate goals are too different for there to be a really satisfactory outcome.
Oh, I'm pretty sure they'll reach some sort of fudge, but no one will be fooled. Everyone will be papering over the cracks for that moment of unity. Frankly, it can't be anything but. Such disagreements were probably inevitable. Just think about it. The U.S. is now exporting its problems to other countries, like Brazil and South Asia, through its policy of quantitative easing, QE2, $600 billion.
The German finance minister has called it clueless. Europe has induced austerity measures rarely seen. The vitriol is everywhere. By the time the G20 is over at the end of the week, there's only really one question we'll really be asking -- was it worth it?
We'll answer that before the week is out.
And that is QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
I'll see you later in the week from Abu Dhabi.
"WORLD ONE," though, starts right now.